The Response To Being Served With A Summons And Complaint: The “Answer” – Part II

foreclosure lawyer“Counterclaims”

In addition to denying the allegations and submitting affirmative defenses, the homeowner can countersue the financial institution within the confines of the foreclosure lawsuit. These counter lawsuits are referred to as counterclaims. An example of a counterclaim would be a request to quiet title based on some fraudulent activity. This basically means you wish to set aside the mortgage because of fraudulent activity. Counterclaims can also be related to monetary damages based on filing a false lis pendens which damaged the title to the homeowner’s home. There are other possible counterclaims which can be brought.


Homeowners who do not submit an Answer to the court and the plaintiff’s counsel default with regard to the lawsuit. This allows the attorney for the bank to take a default judgment against the homeowner. The default judgment basically indicates the homeowner did not contest the lawsuit and the bank is entitled to all of the relief requested in their Complaint. When a financial institution receives a default judgment they can move much quicker to take action to cause the home to be sold at auction. The default will also allow the bank to obtain a deficiency judgment if they plead it in their Complaint should the proceeds of the sale of the home not satisfy the balance due in the note and mortgage.New York foreclosure defense attorney

Foreclosure Legal Documents – Part I

foreclosure defense on Long IslandThe Summons

The purpose of a Summons is to inform the person being sued that a lawsuit is pending against them and an Answer to the lawsuit must be filed if they seek to contest or assert their rights related to the lawsuit. Each defendant in a foreclosure lawsuit who is named must be served by a process server in New York. Homeowners who are named as defendants in foreclosure lawsuits must be served with a Summons. Also, individuals having liens on the house or creditors holding judgments filed against the house also must be served with a Summons. This gives these other individuals notice that this lawsuit may affect their rights to collect on their liens and judgments against the house. The Summons specifically provides notice to the homeowners with regard to how much time they have to respond to the initiation of the lawsuit. The Summons states if the individual is served personally, they have twenty days to respond, and if served by any other means other than personal service, they have thirty days to respond to the lawsuit. This sets the time period by which homeowners who are served with the Summons and Complaint in foreclosure cases must respond to it by filing a written Answer, acknowledged before a notary public, with the Court and with the attorney for the bank. If the homeowner fails to respond in a timely manner, their failure to submit an Answer will be considered a default. The default means the homeowner is not challenging the allegations in the lawsuit.New York foreclosure defense lawyer

Underwater Homes

foreclosure defense lawyer in New YorkThe term “underwater homes” means the home is worth less than the amount owed on its mortgage. Another way of referring to a home that has a mortgage greater than its value is “negative equity”. Most people who are in underwater homes are unable to sell their home or refinance it. At the height of the real estate crisis in America in 2012, approximately one-third of all homes in the United States were underwater. Today, approximately 15% of homes in the United States are underwater. This represents about 12% of all homeowners in the country, or approximately 950,000 homeowners have homes which are underwater. In many instances, homeowners’ homes are so far underwater that the mortgage is twice the value of their home.

Real estate values have been going up recently. However, many homes in America are so far underwater these homes will never reach a point of having equity in them.

Lack of Funds and Bad Credit

This can result in the homeowner trying to rent a home when they don’t have sufficient funds to pay the security and one month’s rent on a rental apartment or rental home. They also will most likely have a low credit score because they are behind on their mortgage payments. Landlords do not like to rent homes to families that have bad credit.

What Should Homeowners With Underwater Homes Do?

The best recommendation would be to consult with a foreclosure defense attorney. What homeowners of underwater homes should not do is move out and abandon their homes. The fact their home is underwater and they are behind on their mortgage, does not mean they are in imminent threat of losing their home and being forced out of it. In most situations, it is in the homeowner’s best interest to continue to live in their home. Many homeowners do not understand the full implications of simply moving out of their home, abandoning it and not paying their mortgage.


Don’t move out of your home solely if you are behind on your mortgage payments. Try to obtain a mortgage modification. Seek out an experienced foreclosure lawyer and review your options with him or her.New York foreclosure defense lawyer

New York Banks Agree to Maintain “Zombie Properties”

foreclosure defense for homeowners on Long IslandEleven banks in the State of New York have agreed to establish a program to maintain and monitor homes in foreclosure which are vacant. They have taken this action because of pressure from the New York State Attorney General, Eric Schneiderman, and complaints by neighbors surrounding these properties which have been made to the financial institutions. These eleven banks and credit unions represent approximately three-quarters of all of the houses in foreclosure in the Metropolitan New York market.

Bank To Check To See If Homes Are Vacant

The banks have agreed they will check all properties within 60 days of the loans becoming delinquent. The checking will involve an external inspection. In addition, the financial institutions will check each property in foreclosure every 25 to 35 days thereafter. If they reach a decision that the foreclosed home has been abandoned by its owners, they will post a notice with their contact information on it. In addition, they will change one of the door locks. They will also board up broken windows and doors and remove nuisance features. In addition, they will take action with regard to safety issues. All of these properties will be placed on a list to be shared with municipalities throughout the State.

The Eleven Banks

The eleven banks which have agreed to this process are: Ridgewood Savings Bank, M&T Bank, Bethpage Federal Credit Union, Astoria Bank, Green Tree Servicing, PHH, Northstar, Ocwen, CitiMortgage, Bank of America, and Wells Fargo.

More and More Zombie Homes

Attorney General Eric Schneiderman who had previously submitted legislation to the State Legislature, noted that zombie foreclosures have increased more than 50% recently. He claims there are approximately 17,000 zombie homes being foreclosed on. Zombie homes place burdens on the communities in which they are located. These burdens deal with maintenance costs, property tax issues, and vandalism of these homes.

New York foreclosure defense lawyerElliot S. Schlissel is a foreclosure lawyer representing homeowners throughout the Metropolitan New York area. His motto is, “I will keep you in your home.”

New Precedent Regarding the Lack of Standing Defense in Foreclosure Lawsuits

foreclosure defense for Long IslandersOne of the most potent defenses a homeowner has in a foreclosure lawsuit is based on the concept the financial institution bringing the lawsuit is not the rightful owner of the note and mortgage at the time the lawsuit was commenced. The legal terminology regarding this situation refers to the fact the financial institution lacked standing to bring the lawsuit. When this affirmative defense is alleged by the attorney for the homeowner, the lender now has the burden of proving it actually was the rightful owner of the note and mortgage at the time the lawsuit was initiated. In other words, the financial institution must show it was the appropriate institution to bring the foreclosure lawsuit.

Pleading Lack of Standing As An Affirmative Defense

The homeowner in a foreclosure lawsuit, up until now, needed to plead the affirmative defense of lack of standing in their Answer. If they did not specifically plead the lack of standing affirmative defense, courts have traditionally taken the position the homeowners have waived their right to allege this defense. This means the financial institution did not have to meet the burden of establishing it was the proper party at the time the lawsuit was initiated to bring the foreclosure proceedings. New York Civil Practice Law and Rules section 3018(b) which is entitled “Responsive Pleadings” states “[a] party shall plead all matters which if not plead would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading.” This section of the law requires defendants in all lawsuits to plead whatever defenses they feel are appropriate. If defendants in civil lawsuits do not plead their defenses, they simply waive them.

Appeals Court Decision May Have Changed the Law

Recently the Appellate Division of the Second Department, an appeals court, has rendered a decision which may change the law with regard to a homeowner raising the issue of standing in a mortgage foreclosure lawsuit as a defense. In the case of U.S. National Association v. Faruque, 120 A.D.3d 575, 991 N.Y.S.2d 630 (2d Dept. 2014) they placed the issue of standing before a court even though it was not alleged in the homeowner’s pleading.

In the Faruque case the appeals court departed from prior legal precedents. In the Faruque case the bank started a foreclosure lawsuit. The homeowner submitted an Answer which stated they “specifically denied that the note was delivered to the plaintiff or that an assignment” from the originating lender to the plaintiff “had been recorded.” Although this allegation contained elements of the lack of standing defense, the homeowners did not plead the bank had lacked standing to bring the lawsuit. In this case the court held the homeowner “was not required to plead lack of standing as an affirmative defense.” The court went on to state “in order for the plaintiff to be entitled to relief, it had to prove its standing.”

The court in the Faruque case rendered a decision whereby the financial institution did not meet its burden under the circumstances of the case because it “did not establish that the note was physically delivered to it prior to the commencement of the action.”

Best Practice

Whether the Faruque case will change the case law in the State of New York to assume a lack of standing legal defense is questionable. The best way for a homeowner to submit the most potent Answer in a foreclosure lawsuit is to plead the affirmative defense of lack of standing. This creates a problem for the bank in the case. The bank then must prove they actually were the legitimate owner of the note and mortgage at the time of initiation of the foreclosure lawsuit.New York foreclosure defense attorney

What Happens When You Fall Behind On Your Mortgage?

To watch today’s video blog, please click on the link below:

Elliot Schlissel is a foreclosure defense lawyer helping homeowners stay in their homes throughout the Metropolitan New York area.  He and his associates can be reached for consultation at 516-561-6645 or 718-350-2802 or send an email to

Proposed Changes To The Foreclosure Process In New York State

foreclosure defense lawyerBenjamin Lawsky is the Superintendent of Financial Services in New York State. He feels the delays in foreclosure settlement conferences are the main reason why New York’s foreclosure system is “broken and badly in need of change.” A study by the Department of Financial Services found that it takes approximately 9 months from the time a foreclosure lawsuit is initiated to when the foreclosure settlement conference procedures are completed. With regard to this approximate 9 month period, he stated “unfortunately…the mandatory settlement conferences have not been the timely and efficient forum for foreclosure resolution that was once envisioned.” He went on further to state “for borrowers that are already at the end of their rope, any interruption – let alone nine months of start – and – stop delays – can be the death knell to any chance of saving their home.”

New York Civil Practice Law and Rules section 3408(a)(1) requires both the homeowner and the financial institution negotiate in good faith. Lawsky finds that there is a lack of a clear definition of what is “good faith.”

Bank’s Representatives Having No Authority To Settle

In many situations, courts are confronted by bank attorneys appearing at foreclosure court conferences who do not have authority to enter into settlements or mortgage modifications with homeowners. In these situations the courts often simply keep adjourning the case until someone shows up who has greater authority to enter into mortgage modifications on behalf of the banks.

Lawsky believes the law creating foreclosure court conferences is flawed. He stated “the unintended consequences of this legal flaw are unproductive conference sessions, useless delays, waste of court resources, and most importantly, needless foreclosures.” Lawsky wants there to be new legislation which will define what negotiating in good faith means to both homeowners and financial institutions. He also feels courts should have greater authority to impose sanctions on the parties to these proceedings who do not negotiate in good faith.

Zombie Homes

Lawsky feels there is a special problem in the courts with the processing of foreclosures on “zombie homes”. Zombie homes are homes which have been abandoned by the homeowners. These homes create a blight in communities. They are vacant. Sometimes they are vandalized. Vandals remove the pipes from these homes. Lawsky wants the foreclosure process on vacant homes to be streamlined to allow them to be expedited. Lawsky has specifically suggested a new non-judicial process for either uncontested foreclosures or foreclosures on vacant homes be established.

Courts Flooded With Foreclosures

Approximately one-third of all the cases brought before the Supreme Court Civil Parts throughout the State of New York are now foreclosure cases.


The foreclosure process should be set up in a manner to help homeowners who have the wherewithal to keep their homes and obtain mortgage modifications.foreclosure defense attorney in New York

Deeds In Lieu of Foreclosure: An Imperfect Remedy

foreclosure attorney for homeownersDeeds in lieu of foreclosure are used by many attorneys and homeowners to short circuit the foreclosure process. I rarely suggest to a client to execute a deed in lieu of foreclosure. What a deed in lieu of foreclosure accomplishes is it allows the bank to take the home back quickly. It often leaves the homeowner with no credit, no assets, and no place to live! The reason given for executing a deed in lieu of foreclosure is it will eliminate a deficiency judgment.

Deficiency Judgment

Here is an example of what a deficiency judgment is: let’s assume there is a home worth $300,000, and a mortgage on the home in amount of $400,000. The house sells for $250,000 to a speculator at a foreclosure sale. There is a $150,000 deficiency which is still owed by the borrower. The deed in lieu of foreclosure prevents the bank from getting a deficiency judgment in the amount of $150,000.

This is the selling point used by many attorneys. It is usually a false selling point. Banks, generally speaking, do not pursue deficiency judgments in the Metropolitan New York area if the homeowner has no assets. Even if the bank desires to move forward for a deficiency judgment, the homeowner can simply file a Chapter 7 bankruptcy and eliminate the debt.

Fighting the Foreclosure Proceeding

When the homeowner decides to hire an attorney and fight the foreclosure proceeding, both the homeowner and his or her family will probably spend the next three or four years living in their home and not facing the problems of finding a place to live without credit and financial resources.

Deeds in Lieu of Foreclosure Won’t Always Work

A deed in lieu of foreclosure is usually only accepted by financial institutions where there is no equity in the property, and there are no liens or other mortgages attached to the property. In these types of cases, most banks will agree to a deed in lieu of foreclosure transaction.

If there is a second mortgage, monetary judgments on the property, mechanics’ liens, or other types of liens on the property, the bank will generally not agree to a deed in lieu of foreclosure transaction. In these situations they want the foreclosure sale to go forward. At the foreclosure sale, the second mortgage, the mechanics’ liens, and the judgments will be eliminated. The bank will obtain clear title to the property and not have to deal with the nuisances involved with other title impediments. In situations where there are second mortgages, mechanics’ liens, or other judgments or liens on the property, most banks will simply want to continue with the foreclosure process to obtain clear title.

New York foreclosure defense attorney IslandElliot Schlissel is a foreclosure defense lawyer helping homeowners stay in their homes throughout the Metropolitan New York area.

Various Fraudulent Mortgage Transaction Issues – Part I

foreclosure defense help in New YorkPhony Appraisals

Many fraudulent mortgage transactions start out with the appraiser coming back with an inflated value of the home for which the purchaser seeks to obtain a mortgage. In cases where the purchaser actually couldn’t afford the home to begin with, the mortgages they were offered were mortgages involving negative amortization. Negative amortization refers to a situation where instead of paying down the mortgage, a portion of the interest gets added to principal and the homeowner ends up owing more money than they started out borrowing.

Truth in Lending Law Violations (“TILA”)

The Truth in Lending Law requires banks to abide by a certain ethical code of conduct. Predatory lending is defined under the Truth in Lending Law as any pattern of conduct in which the actual lender is hidden through subterfuge. Violations of the Truth in Lending Law allow the damaged party to recover their attorney’s fees, and treble damages.

When purchasers attend a closing they sign numerous documents. The two most significant documents are the note and the mortgage. The note is an I Owe You. It is documentation that a debt exists. However, the evidence of the existence of the debt is subject to being rebutted. The mortgage creates a lien pursuant to a written contract. The contract is a contract to enforce the note. If the note is invalid, is unenforceable or can be rebutted, in theory, the mortgage should be able to be set aside. Unfortunately, the courts in New York currently do not see things this way.New York foreclosure defense attorney Island

The Foreclosure Process: The Initial Steps

foreclosure defense for homeownersThe first step in a foreclosure proceeding is the bank sending the homeowner a letter accelerating the mortgage. The acceleration letter advises the homeowner the financial institution (lender) will call in the entire balance of the mortgage, which represents the total amount due, unless the homeowner becomes up to date on his or her mortgage payments by a specified date. Most banks send an acceleration letter after the homeowner falls approximately three months behind on their mortgage payments. However, there is no specific rule which requires a bank to send an acceleration letter when the homeowner is three months behind.

Falling Behind On Your Mortgage Payments

The homeowner technically defaults on the payment of the loan on their home when they become one month late on their mortgage payments. However, as indicated earlier in this article, acceleration letters are almost never sent out prior to the homeowner being three months behind on their mortgage.

Ninety Day Pre-Foreclosure Filing Notice

New York State has a statute which requires the financial institution holding the mortgage to send out a notice a minimum of ninety days before they initiate a foreclosure legal action by filing a Summons and Complaint in the County Clerk’s office of the County in which the home is located. There are very specific rules and notice requirements concerning the ninety day pre-foreclosure filing notice. This notice also must list at least five not for profit organizations which can provide information or counseling to homeowners with regard to the problems they are having in making their mortgage payments.New York foreclosure defense attorney Island

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